2018 (7) TMI 1373 - AT - Service Tax

Valuation - inclusion of freight and transportation charges from factory gate to the premises of Stockyard /Consignment Agent in assessable value - assessee contended that they never acted as consignment agent though there is an agreement for consignment agent - Held that - It is seen that the Assessee paid the duty on the Invoice value - The Revenue had not disputed the fact that the assessee cleared the converted goods on payment of Central Excise duty - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Requirement of Service Tax payment by the assessee for conversion services provided to Tata Steel Limited.
2. Classification of the assessee's role as a Consignment Agent.
3. Inclusion of freight and transportation charges in the assessable value for excise duty.
4. Justification of service tax demand, interest, and penalties.

Issue-wise Detailed Analysis:

1. Requirement of Service Tax payment by the assessee for conversion services provided to Tata Steel Limited:
The core issue revolves around whether the assessee is liable to pay Service Tax on the conversion of H.R. Sheets into ETP/FHCRILACQUERED Sheets/Lacquered & Printing for Tata Steel Limited (TSL). Show Cause Notices alleged that Service Tax was required on consignments of converted goods sent to stockyards or consignment agents at specified rates. The Adjudicating authority confirmed the demand for Service Tax along with interest and imposed penalties. However, the Commissioner (Appeals) set aside this order, leading to the Revenue's appeal.

2. Classification of the assessee's role as a Consignment Agent:
The Revenue contended that the assessee acted as a Consignment Agent for TSL based on the Conversion Agreement. The Commissioner (Appeals) observed that the assessee converted raw materials from TSL into finished products and supplied them to TSL on payment of excise duty. The assessee argued that despite the agreement titled "consignment agent," they did not perform any consignment agent activities. The Commissioner (Appeals) found that the title of the agreement did not reflect the actual activities performed, which were limited to conversion and supply of finished goods.

3. Inclusion of freight and transportation charges in the assessable value for excise duty:
The Commissioner (Appeals) noted that the assessable value for excise duty included freight and transportation charges from the factory gate to the stockyard/consignment agent's premises. The assessee provided invoices showing that these charges were included in the assessable value. Since excise duty was paid on this value, the Commissioner (Appeals) concluded that Service Tax on the same amount could not be demanded.

4. Justification of service tax demand, interest, and penalties:
The Commissioner (Appeals) ruled that since the excise duty covered the freight and transportation charges, the demand for Service Tax was unjustified. Consequently, the associated interest and penalties were also deemed unwarranted. The Revenue's appeal included references to the Consignment Agent Agreement to support their claim, but the Tribunal upheld the Commissioner (Appeals)'s decision, finding no reason to interfere.

Conclusion:
The Tribunal dismissed the Revenue's appeals and disposed of the Cross Objection, affirming that the assessee's activities did not justify the Service Tax demand. The Tribunal relied on precedents, including the Hon’ble Punjab & Haryana High Court's decision in Commissioner of Central Excise, Panchkulla Vs. Kulcip Medicines (P) Ltd, which clarified that service tax is not applicable when clearing and forwarding operations are not jointly performed.

Operative Part:
The Tribunal pronounced the operative part of the order in court, confirming the dismissal of the Revenue's appeals and the disposal of the Cross Objection.